Company Accounts

Share Capital

Medium

common

Identify the sequence of journal entries with regard to transfer of shares application money and allotment of shares:

(A) Share Allotment A/c Dr.

To Share Capital A/c

(B) Share Application A/c Dr.

To Share Capital A/c

(C) Bank A/c Dr.

To Share Allotment A/c

(D) Share Application A/c Dr.

To Bank A/c

Choose the correct answer from the options given below:

(A), (B), (C), (D)

(A), (D), (C), (B)

(B), (D), (A), (C)

(C), (B), (D), (A)

✅ Correct Option: 3

The correct sequence of journal entries during share application and allotment process is:

Entry (B): Share Application A/c Dr. → To Share Capital A/c

This entry records the transfer of application money to share capital account when shares are allotted to applicants. The application money collected becomes part of the share capital.

Entry (D): Share Application A/c Dr. → To Bank A/c

This entry is made when excess application money (from over-subscription) needs to be refunded to unsuccessful or partially allotted applicants. The application account is debited to close it, and bank account is credited as money is paid out.

Entry (A): Share Allotment A/c Dr. → To Share Capital A/c

After shares are allotted, the allotment money becomes due from shareholders. This entry records the amount due on allotment as a liability of shareholders, transferring it to share capital account.

Entry (C): Bank A/c Dr. → To Share Allotment A/c

When shareholders actually pay the allotment money, cash/bank is debited and the share allotment account is credited, clearing the amount due from shareholders.

The logical flow is: Transfer application money to capital → Refund excess application money → Record allotment due → Receive allotment payment.

Correct Answer: Option 3: (B), (D), (A), (C)

2025: 16 May Shift 1

Balance of share forfeiture account is shown in the balance sheet under which item :

2026: 12 May Shift 1

A company forfeits 200 shares of Rs. 10 each on which Rs. 600 had been received. It can allow a maximum discount of Rs. 600 on their reissue. Assuming that the company reissues these shares for Rs. 1,800 as fully paid up. What will be the journal entry for the treatment of remaining forfeited amount after adjustment of discount ?

Date	Particulars	L.F.	Dr. Amount	Cr. Amount
	Share Forfeiture A/c Dr.		400
	To Capital Reserve A/c			400

Date	Particulars	L.F.	Dr. Amount	Cr. Amount
	Capital Reserve A/c Dr.		400
	To Share Forfeiture A/c			400

Date	Particulars	L.F.	Dr. Amount	Cr. Amount
	Share Forfeiture A/c Dr.		200
	To Capital Reserve A/c			200

Date	Particulars	L.F.	Dr. Amount	Cr. Amount
	Capital Reserve A/c Dr.		200
	To Share Forfeiture A/c			200

2022: 20 July Shift 1

Match List - I with List - II

List - I	List - II
(a) The portion of authorised capital of a company which can be called during winding up	(i) Other current liabilities
(b) Excess of share forfeited amount over the loss on reissue	(ii) Reserve Capital
(c) Calls-in-advance is shown in Balance sheet under the head __	(iii) Capital Reserve
(d) Equity shares cannot be issued to public at __	(iv) Discount

Choose the correct answer from the options given below :

2026: 19 May Shift 1

The balance in 'Calls in Advance' account is shown as a separate item under the title Equity and Liabilities in the company's balance sheet under the sub head:

2026: 29 May Shift 1

A company issuing sweat equity shares has to fulfill the following prescribed conditions :

(A) These shares are of the same class of shares already issued.

(B) It is authorized by a special resolution passed by a company.

(D) Not less than one year has, at the date of issue, elapsed since the date on which the company had commenced business.

Choose the correct answer from the options given below:

2026: 29 May Shift 2

Arrange the following categories of share capital in the correct sequence to show in the notes to accounts of balance sheet:

A. Authorised Share Capital

B. Subscribed and Fully Paid-Up Capital

C. Issued Capital

D. Subscribed but not fully paid up Capital

Choose the correct answer from the options given below:

Solution

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